Log market report - July 2026 [NZ]Friday 7 Aug 2026
Softwood log inventories and daily offtake have remained steady, while lower log supply from New Zealand is providing additional support to the market. However, ocean freight costs have risen sharply again in recent weeks as shipping markets respond to ongoing tensions in the Middle East. These fluctuations combined with foreign exchange movements creates uncertainty for future AWG pricing. Domestically, sawmill demand continues to outperform expectations for the winter period. Forward orders are increasing, domestic timber supply remains tight following recent mill closures, and strong export demand from Asian markets is supporting sawn timber price increases. The PF Olsen Log Price Index increased $3 to $122, which is $2 above the two-year average and $3 above the five-year average. Domestic Log Market Most domestic log pricing has remained stable for Quarter 3. Most domestic log processors are charging a 2% fuel surcharge on domestic sawn timber in July, and the surcharge is reviewed monthly. As noted in previous months, while construction activity remains below long-term averages, sawmill demand has generally held up better than expected. Mill closures over the past two years have tightened timber supply, resulting in a better balance between supply and demand. Mills report July sales were lower than June, but still relatively strong for the winter period and more importantly, forward orders are increasing. Residential construction continues to show gradual signs of recovery. The annual number of new dwelling consents has continued to increase, led primarily by townhouse and multi-unit developments, although activity remains well below the post-COVID peak. In contrast, non-residential construction remains subdued, reflecting cautious business investment and ongoing project cost pressures. There is strong demand from Asian markets for New Zealand export sawn timber, with price increases recorded across most grades. The combination of improved export demand and tighter domestic supply has supported sawmill utilisation and pricing despite the traditionally quieter winter construction period. The recent introduction of the Government's Building Amendment Bill, which aims to streamline consenting and improve efficiency within the construction sector, is a positive medium-term development. While the reforms are unlikely to influence timber demand immediately, they should support future residential and commercial building activity once implemented. China CFR prices for A-grade logs from New Zealand are currently in the range around USD 126 per JASm³ for the larger exporters. Softwood log inventories in China have remained stable as has overall demand, despite activity reducing in the South China and Yangtze River Delta regions due to storms and flooding. Daily log offtake remains steady at approximately 55,000 m³ per day, which is encouraging given the weather events and hot climate in China. The supply chain has noticed log volumes from New Zealand has dropped compared to this time last year, which is positive for the market. More >> Source: Stand Forestry Limited Image credit: Scott Downs | ||
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